Correlation Between Live Nation and Guild Esports
Can any of the company-specific risk be diversified away by investing in both Live Nation and Guild Esports at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Live Nation and Guild Esports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Live Nation Entertainment and Guild Esports Plc, you can compare the effects of market volatilities on Live Nation and Guild Esports and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Live Nation with a short position of Guild Esports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Nation and Guild Esports.
Diversification Opportunities for Live Nation and Guild Esports
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Live and Guild is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and Guild Esports Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guild Esports Plc and Live Nation is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Live Nation Entertainment are associated (or correlated) with Guild Esports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guild Esports Plc has no effect on the direction of Live Nation i.e., Live Nation and Guild Esports go up and down completely randomly.
Pair Corralation between Live Nation and Guild Esports
Considering the 90-day investment horizon Live Nation is expected to generate 10.25 times less return on investment than Guild Esports. But when comparing it to its historical volatility, Live Nation Entertainment is 19.45 times less risky than Guild Esports. It trades about 0.4 of its potential returns per unit of risk. Guild Esports Plc is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 0.27 in Guild Esports Plc on August 31, 2024 and sell it today you would earn a total of 0.50 from holding Guild Esports Plc or generate 185.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Live Nation Entertainment vs. Guild Esports Plc
Performance |
| Timeline |
| Live Nation Entertainment |
| Guild Esports Plc |
Live Nation and Guild Esports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Nation and Guild Esports
The main advantage of trading using opposite Live Nation and Guild Esports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation position performs unexpectedly, Guild Esports can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Guild Esports will offset losses from the drop in Guild Esports' long position.| Live Nation vs. Liberty Media | Live Nation vs. Atlanta Braves Holdings, | Live Nation vs. News Corp B | Live Nation vs. News Corp A |
| Guild Esports vs. ZoomerMedia Limited | Guild Esports vs. Network Media Group | Guild Esports vs. New Wave Holdings |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Correlations module to find global opportunities by holding instruments from different markets.
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